Updated on March 13, 2023
Consumer Stocks are stocks of companies which are engaged in the production of consumer items like food, pharmaceuticals, beverages, household goods etc as well as alcohol and tobacco products. These products are considered essential and thus also known as consumer staples. They stay in constant demand and the price changes do not impact their demand drastically. Consumer Stocks are considered to be stable, continuous revenue generators and dividend yielding in nature. They generally do not go down drastically during a slowdown.
Benefits of Consumer Stocks
Some benefits of Consumer Stocks are:
a) They are considered to be less volatile.
b) They are reasonable profit earners and pay steady dividends.
c) During downturns, they provide stability to the portfolio.
Disadvantages of Consumer Stocks
Some disadvantages of Consumer Stocks are :
1. They are mostly blue chips and thus their growth is not expected to be extraordinary.
2. They have limited return potential.